Property price decreases are predicted in Spain for the rest of 2023

Property market analysts are forecasting a shift in Spain's property market as the year 2023 draws to a close. After nearly a decade of continuous price increases, many experts are now anticipating a dip in property prices, although this decline is not expected to be uniform across the country. While certain regions, particularly major cities, are projected to see continued growth, others may experience a downturn.

The primary driver behind this anticipated shift is economic uncertainty. The financial strain experienced by individuals and families in 2022 and 2023, particularly concerning the rising cost of living and increased borrowing expenses, is influencing the property market dynamics.

In some parts of Spain, property prices are expected to decline primarily due to higher mortgage rates, persistent inflation, and stricter lending criteria imposed by banks. These factors have deterred potential buyers from entering the property market, prompting many to remain in the rental market instead.

The General Council of Real Estate Agents in Spain has acknowledged that the first half of the year witnessed stagnation in house prices due to rising interest rates, affecting consumers and families. If the situation does not stabilize, there could be a drop in the average property prices, especially for second-hand properties.

So, how much are property prices expected to decrease by? A panel of property analysts seem to agree that moderation in the market is expected towards the end of the year, with most predicting declines ranging from 2% to 5% by 2024. The consensus is that both property sales and purchases will continue to decline.

An economics professor at Barcelona University, Gonzalo Bernardos, goes further by predicting a 5% price drop by the end of 2023, followed by an additional 3% decline in the first half of 2024. However, despite the challenges posed by increasing mortgage costs, there remains robust demand in metropolitan areas. Significant disparities are expected across different parts of Spain, with some regions witnessing more pronounced declines as the year progresses towards 2024.

Property price fluctuations will significantly depend on the location in Spain. In larger cities, coastal areas, and islands, it is unlikely that prices will fall, whereas inland towns, cities, and rural areas are more likely to experience price drops.

However, some experts believe that any decreases in property prices will be short-term, with a bullish market outlook in the coming years, albeit at varying rates.

So, where in Spain can we expect property price drops to occur? It is likely that in cities like Madrid, it is very difficult for this to happen, in environments where investment, the economy, and a whole community are pulling the national economy. In fact, it is expected that in Pamplona, Valencia, Alicante, and the islands prices will rise.

Those seeking affordable properties in Spain are encouraged to explore the country's interior, as a recent study by Caixabank Research revealed that coastal properties in Spain are on average up to 75% more expensive than inland options.